Akin Gump Strauss Hauer & Feld LLP lawyers have broad experience advising and representing clients on all aspects of the national security reviews of foreign acquisitions of U.S. companies conducted by the interagency Committee on Foreign Investment in the United States (CFIUS). CFIUS is responsible for administering the Exon-Florio Amendment to the Defense Production Act of 1950, which grants the president authority to review any acquisition, merger or takeover by or with any foreign person that could result in control over a person engaged in interstate business in the United States and to suspend or prohibit any such transaction that would threaten to impair the national security of the United States. Although CFIUS review is not mandated prior to closing, covered transactions, in which national security concerns are implicated, are usually voluntarily submitted to CFIUS to avoid the possibility of a post-closing CFIUS review and divestiture order.

Foreign direct investment in certain U.S. industries deemed to constitute “critical infrastructure” (defined to include major energy assets specifically and other assets and systems the destruction or incapacity of which would impair U.S. national security) faces closer scrutiny and more extensive substantive review. In such cases, CFIUS may demand concessions from the foreign party that restrict its control over, and/or access to, the target U.S. entity. In 2007, the Foreign Investment and National Security Act (FINSA) was enacted, which amended the Exon-Florio law by expanding the scope of CFIUS investigations and increasing congressional oversight of the process.

Because CFIUS has a limited amount of time under the statute to determine whether a full investigation of a proposed transaction is necessary, Akin Gump recommends engaging key CFIUS members as soon as possible, particularly for transactions that are complex and likely to attract significant public attention, in order to explain the proposed transaction, provide information about the parties and engage in early dialogue with CFIUS members. In certain transactions, it is also prudent to affirmatively engage other select policy makers and stakeholders to address issues that might arise in a transaction. In these cases, lawyers and other professionals from our international trade and public law and policy practices will team with members of other relevant firm practices (e.g., telecommunications, government contracts, energy, corporate and private equity) as necessary to address issues raised by CFIUS members. In many cases, these issues can be addressed effectively before the notice is filed. In transactions that may involve high profile U.S. policy or political issues, efforts may be required to in addition to the formal CFIUS process. In such cases Akin Gump CFIUS practitioners would evaluate the need for—and, as necessary and appropriate, develop and implement—coordinated public policy outreach to support the transaction. The firm approaches such cases with a fully integrated and coordinated team to address the full spectrum of regulatory, policy and political issues that may be implicated by the transaction.

Finally, not all transactions involving foreign parties warrant a CFIUS notice. Thus, we have frequently advised clients that a proposed transaction contemplating the acquisition of a U.S. company by a foreign person appears to have little or no potential impact on U.S. national security, and, consequently, that there is minimal risk presented by opting not to submit a voluntary notice to CFIUS. Issues of non-controlling foreign investments in U.S. companies are also receiving greater attention, with the need to evaluate whether and when such investments might be deemed to result in foreign “control” for CFIUS purposes, and whether such transactions may nonetheless trigger concern among U.S. policy makers in Congress or elsewhere. Where U.S. national security or critical infrastructure concerns are more obvious, or the transaction is likely to be controversial, we have represented both sellers and buyers before CFIUS and successfully navigated them through the review process; in most cases, obtaining a termination of the proceeding by CFIUS following its initial 30-day review.